Chapter 15, Title 11, United States Code is a
section of the United Statesbankruptcy code that deals with jurisdiction. Under
Chapter 15 a representative of a corporate bankruptcy (insolvency)
proceeding outside the U.S. can obtain access to the United States
courts. It allows cooperation between the United States courts and
the foreign courts, as well as other authorities of foreign
countries involved in cross-border insolvency cases.

Contents

Jurisdiction
issues

It happens with increasing frequency that a bankruptcy proceeding in
one country has a connection
to assets or information located in another. Because of the
involvement of multiple jurisdictions unique problems arise. In
order to solve some of these problems, the United States enacted
Section 304 of the US Bankruptcy Code in 1978. Section 304 has
recently been repealed and replaced with Chapter 15, titled
"Ancillary and Other Cross Border Cases". This section has
increased the range of options available in the United States in
support of foreign bankruptcy proceedings.

UNCITRAL

Chapter 15 incorporates the Model Law on Cross Border Insolvency
drafted by the United
Nations Commission on International Trade Law. The law provides
solutions to problems which arise in connection with cross-border
bankruptcy, allowing US courts to issue subpoenas, orders to turn over assets, the
issuance of stays on
pending actions, and orders of other types as circumstances
dictate. The ancillary proceeding permitted under Chapter 15 is
often a more efficient and less costly alternative to initiating an
independent bankruptcy proceeding in the United States. It also
avoids the conflicts which could arise between the jurisdictions
involved in two independent bankruptcy proceedings initiated in
connection with the same debtor.

Chapter 15 also establishes mechanisms for the cooperation
between US and foreign courts and representatives regarding
proceedings which involve the same debtor.

Discretionary assistance

Whether the US courts will extend the "additional assistance"
sought in connection with a foreign proceeding under Chapter 15 is
a matter of discretion.

The main consideration the US courts will take into account in
making this decision is whether the laws of the foreign
jurisdiction in connection with which the additional assistance is
sought violate the laws or public policy of the United States and
if the foreign courts conduct their proceedings according to basic
rules of procedural fairness.

Among other factors the US courts will consider how the foreign
jurisdiction treats creditors, whether it prevents the fraudulent
transfer of debtor's property, if US creditors are protected
against prejudice in the processing of their claims there, and the
manner in which assets are distributed.

The court may conduct an evidentiary hearing, including the
hearing of expert testimony, to determine whether the
proceedings of the foreign forum are sufficiently just to grant the
assistance requested.

Original Chapter 15
(1978-1984)

The original 1978 Bankruptcy Code had a different Chapter 15
dealing with the United States Trustee
Program, which it established as a trial in some judicial
districts to assume roles which formerly belonged to the bankruptcy
judge and others, including the selection and oversight of private
trustees in individual cases. At that time, the other chapters of
the Bankruptcy Code described how bankruptcy worked in districts
without United States Trustees; original Chapter 15 modified the
text of the other chapters for districts with United States
Trustees. Section numbers in original Chapter 15 incorporated the
section numbers in the main Code that they modified; for example,
section 151325 (a section of original Chapter 15) modified section
1325, which sets the requirements of Chapter 13
plans.

Since the trial program was considered a success, Congress in
1984 ordered the creation of United States Trustees in all states
except Alabama and North Carolina.
Since original Chapter 15 now applied in most states, its text was
then merged into the main Bankruptcy Code; separate provisions were
enacted for Alabama and North Carolina, where other officers of the
court assume the role of the United States Trustee.